Trade Remedy Provisions in Regional Trade Agreements

Abstract

This paper maps and examines the provisions on anti-dumping, countervailing duties and safeguards in seventy-four regional trade agreements (RTAs). The RTAs vary in size, degree of integration, geographic region and the level of economic development of their members. The key policy concern of the paper is that the elastic and selective nature of trade remedies may lead to more discrimination, with reduced trade remedy actions against RTA partners, but a greater frequency of trade remedy actions against non-members. The adoption of RTAspecific trade remedy rules increases this risk of discrimination, with trade remedies against RTA members being abolished outright or being subjected to greater discipline. The templates used for mapping the trade remedy provisions reflect this central concern. The results of the mappings suggest the need to be vigilant about increased discrimination arising from trade remedy rules in RTAs. A number of RTAs have succeeded in abolishing trade remedies. Probit and multinomial logit model estimations suggest that these RTAs are characterized by a higher share of intra-RTA trade and deeper forms of integration that go well beyond the dismantling of border measures. A fairly large number of RTAs have adopted RTA-specific rules that tighten discipline on the application of trade remedies on RTA members. In the case of anti-dumping for example, some provisions increase de minimis volume and dumping margin requirements and shorten the duration for applying anti-dumping duties relative to the WTO Anti-dumping Agreement. In similar fashion, many of the provisions on bilateral safeguards lead to tightened discipline or reduce the incentives to take safeguard actions. Safeguard measures can be imposed only during the transition period, have shorter duration periods and require compensation if put in place. Further, retaliation is allowed if there is no agreement on compensation. RTA provisions on global safeguards require that, under certain conditions, RTA partners be exempted from multilateral safeguard actions. This conflicts with multilateral rules which require that safeguard measures be applied to all sources of imports and highlights the problem of trade diversion. A small number of RTAs give a role to regional institutions to conduct anti-dumping and countervailing duty investigations and to review final determinations of national authorities. There is a theoretical presumption and some empirical evidence to suggest that this reduces the frequency of anti-dumping initiations and final determinations against RTA members. In the case of CVDs, we are unable to find major innovations in CVD rules and practice by past and present RTAs. A major reason for this may be the absence of commitments in the RTA on meaningful or significant curbs on subsidies or state aid.